Now it is around 12 per cent, despite efforts by many funds to reduce discounts

The increase is due to over- supply and under-demand. The number of trusts has increased and traditional investors have been selling, while demand for their shares has not kept up.
In 1993, investment trusts were booming Many traded on narrow discounts and a few were at a premium. Investment trust discounts have increased considerably in recent years, leading to concerns about prospects for the industry. But until then Peps remain probably one of the best ways of investing and any existing PEPs are likely to be allowed into the new savings plan.HOMES FOR YOUR WINDFALLSManager Must be exchanged Charge for acceptance Annual PEP chargeor can be heldAlliance Trust Can hold pounds 10.50 nilBaillie Gifford Exchange Stamp duty pounds 30Edinburgh Fund Managers Exchange pounds 25 0.5% up to pounds 40Fidelity Can hold nil nilFlemings Can hold nil pounds 25Foreign & Colonial Exchange nil pounds 61.44Gartmore Can hold nil 0.5%Guinness Flight PEP Can hold nil 1%Henderson Investors Can hold nil pounds 30Invesco Exchange pounds 20 1%John Govett Can hold nil nilKleinwort Benson Exchange Dealing costs 1%Law Debenture Corp Can hold pounds 25 1% up to pounds 20Martin Currie Exchange nil pounds 30Mercury Can hold nil 0.5%Murray Johnstone Can hold Dealing costs 1.25% up to pounds 40Perpetual Can hold nil 0.5%Schroders Can hold nil 0.5%Stewart Ivory Exchange nil pounds 25Source: Association of Investment Trust Companies. It is better to be invested in a fund that shows outstanding growth than to put money into one with low charges and no growth. A good independent financial adviser should be able to advise on which investment trust would best suit your aims.Gordon Brown, Chancellor of the Exchequer, gave notice in his June Budget that Peps are to be replaced by a new tax-favoured investment called the Individual Savings Account (ISA) from 1999. As well as catering for lump sum and windfall investors, most investment trust managers will accept monthly savings into their PEPs.

These start at pounds 20 a month.While charges are important, performance matters more. Like unit trusts, they offer investors a stake in the performance of a broad, professionally-managed share portfolio. However, for investment trusts that invest over half their funds in stockmarkets outside the European Union, only pounds 1,500 can be put into them via a PEP.
Investors receiving windfall shares from building societies and insurance companies converting to public company status can use them to start an investment trust PEP or add them to an existing PEP. If windfall shares are put into a PEP within 42 days, they can be added to the annual pounds 6,000 (or pounds 3,000) investment limit. Some investment trust managers make a small charge for accepting them in a PEP, but most do not.The table shows most of the investment trust managers that will accept windfall shares, whether they can be held separately or exchanged for investment trust shares, and the charges, excluding VAT. Personal equity plans (PEPs) have proved to be one of the best means of long-term saving for any taxpayer.

Individuals can put up to pounds 6,000 a year into a general PEP and pounds 3,000 a year into a single-company PEP, with all dividends and capital growth tax-free. Investment trusts are just one type of investment that can be put in a PEP. Money deposited is lent out for renewable energy and energy conservation projects The minimum deposit is pounds 10. Telephone 0171 973 9339 for information.Other suitable investment opportunities do arise from time to time. One way to keep track of what’s available is to subscribe to the newsletter of EIRIS, the Ethical Investment Research Service A year’s subscription for six issues costs pounds 12. For details, write to EIRIS, 504 Bondway Business Centre, 71 Bondway, London SW8 1SQ (or telephone 0171 735 1351).In a recent pensions article, the Independent of Sunday said of Serps (the earnings related state pension) that many people will not receive the full benefit This seems an alarming assertion.